MinnEcon Category Archive: Minnnesota Fortune 500 companies

Minnesota Exports and the Celtic Tiger

Posted at 3:40 PM on May 11, 2012 by Bill Catlin (0 Comments)
Filed under: Jobs & unemployment, Minnnesota Fortune 500 companies

Whew!

There's a lot going on with these exports.

I generated the following table in response to the questions from StatsGeek.

(Click here for a readable pdf of the table.)

This includes exports and population data for Minnesota and the other 19 states that export more than Minnesota. In short, it shows that only two other states, Kentucky and Massachusetts had slower export growth rates than Minnesota from 2010 - 2011.

Meanwhile, DEED has produced (wait for it) a boatload of data on factors that may explain why Minnesota's export growth has trailed the U.S. average. Think Celtic Tiger + pacemakers.

This is the punch line in the very interesting explanation from Thu-Mai Ho-Kim, senior research analyst at DEED.

"If we exclude Ireland from both MN and US ... MN export growth exceeds US growth for 4 years during the 2005-2011 period, rather than just in 2005, and for most years during the longer period of 1998-2011."

If you want the gory details, here are excerpted parts of her explanation.

One big change that comes to mind involves Ireland (much more important to MN than US) and our medical exports (highly concentrated in MN compared to US). • In the early 2000's our top and strongest growth markets included Ireland because of very strong medical exports. Ireland was our #2 market 2003-2007. • Starting in the mid-2000s and accentuated in the late 2000s, our overall growth rate was impacted as exports to Ireland plummeted/was erratic. These drops to Ireland primarily impacted exports of medical goods and some computer/electronics. Apparently (from other business article readings) the market/demand for the specific medical goods produced in/exported by MN (related to cardiac rhythm management ...) declined drastically over a period of time, perhaps partially due to the slew of recalls around the late 2000s. • Ireland has fallen 14th in 2011. (manufactured exports)

....

Between 1997 (oldest data available) and 2011, Ireland accounts for 0.6% to 1.0% of US exports, so a fairly small share and fairly stable share (although starts at about 0.7%, rises to 1% and then declines to 0.6%).

In 1997, Ireland accounts for about 1.9% of MN exports. This share gradually rises to a peak of 11.5% in 2003 (11.1% in 2004, 9.9% in 2005) and then as medical exports to Ireland sharply fall off, declines to 6.1% in 2009, 2.5% in 2010, and 1.8% in 2011. (For points of reference, in 2011, for mfg exports, our #2 partner China accounts for 11.5% of MN exports and our #3 partner Mexico accounts for 5.6% of MN exports.)

So ... Ireland contributed a large share of exports in the mid-2000s and hence had a strong impact on our growth trends.

Here's a chart that shows
1) Ireland as a share of MN exports (blue line),
2) % change in MN exports to Ireland (Green) and
3) % change in US exports to Ireland. (reddish)

...

If we exclude Ireland from both MN and US, the MN growth trends follow US more closely (though not in 2011), and MN export growth exceeds US growth for 4 years during the 2005-2011 period, rather than just in 2005), and for most years during the longer period of 1998-2011.

(Chart shows Growth rate from previous year. Red font indicates the MN growth rate exceeded the U.S. average.)

One final point from Thu-Mai Ho-Kim:

"Since the mid-2000s ... fortunately we've seen tremendous growth in exports to China, and other emerging markets, which really helped our state exports and offset declines to Ireland!"

Next time I get a chance, I'll try to figure out why exports to Ireland have fallen off.

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19 MN companies on 2012 Fortune 500 list

Posted at 4:37 PM on May 7, 2012 by Bill Catlin (1 Comments)
Filed under: Minnnesota Fortune 500 companies

The 2012 Fortune 500 list came out today, and while Minnesota's tally was down one compared to last year, the list still highlights one of Minnesota's arguably under-appreciated strengths: growing big companies.

Fifteen years ago, Minnesota had 14 companies on the Fortune 500 list. There are 19 companies on the 2012 list. That's down from 20 last year because the defense contractor, ATK, a spin-off from Honeywell, moved its headquarters to the Washington D.C. area to be closer to customers.

ATK was just the latest Minnesota-bred firm to fall off the list due to a move or acquisition. The others that come to mind include: Travelers (the former St. Paul Cos., which moved its HQ to New York), Northwest Airlines (acquired by Delta Air Lines), Norwest Bank (acquired Wells Fargo & Co., and moved the HQ to San Francisco) and Honeywell (merged with Allied Signal; HQ moved to New Jersey).

Some Minnesota companies have bulked up with big acquisitions, such as General Mills' $10.4 acquisition of Pillsbury in 2001. The year before Milwaukee-based Firstar bought US Bancorp for more than $21 billion, but kept the name and headquarters of the Minneapolis-based bank.

Others have come to the list after being spun off by their parent companies, including Ameriprise Financial (which had been part of American Express), and fertilizer maker Mosaic, which Cargill spun off.

Speaking of Cargill, it's one of two privately held companies that are big enough to be added to the Fortune 500, which is based on revenue. Cargill's 2011 revenue reached $119.5 billion. That's well more than any other Minnesota based company and enough to rank Cargill #13 on the list, above Bank of America.

Carlson, the travel conglomerate, reports revenue of $38 billion, roughly in Google's neighborhood, which would rank Carlson in the low 70s.

(The list excludes private companies that do not file financial statements with a government agency.)

Here is a chart comparing Minnesota's Fortune 500 firms in this and last year's lists.

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Rightsizing Best Buy

Posted at 3:23 PM on March 30, 2012 by Marty Moylan (0 Comments)
Filed under: Jobs & unemployment, Minnnesota Fortune 500 companies

This fall Best Buy will close stores in Edina, Brooklyn Center, Hutchinson, Lakeville and Rogers.

The closings are part of a move by Best Buy to shut down 50 of its some 1,100 big-box stores nationwide.

Best Buy will test new formats for the 19 big-box stores that will remain in the Twin Cities region. The remodeled locations will feature expanded Geek Squad services, a knowledge desk to assist customers, and enhanced in-store pick-up services for customers who order online. Some stores may even have kitchen and bath departments.

Some stores may get smaller. The average Best Buy store has nearly 40,000 square feet of space. That's nearly one acre. The majority of Best Buy stores are bigger than an acre.

(Click image below for a larger version of the graphic.)

Analysts say the stores are too big and are out-of-step with the times, as consumer electronics products get more compact and more and more people get movies and music in a digital format, not on discs.

Best Buy had already been shrinking its big-box stores and opening more Best Buy Mobile stores, small shops that focus on selling smart phones and related devices. Best Buy has about 300 of them now, and it plans to have as many as 800 eventually.

The closing of the five stores will affect 301 employees. Best Buy said it will try to find jobs for them elsewhere in the company. In addition Best Buy said it will eliminate 400 corporate and support positions. Those cuts are likely to fall heavily in Best Buy's Richfield headquarters. The moves are all designed to reduce expenses by $800 million over the next two years.

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Minnesota economic data generally positive

Posted at 11:48 AM on March 1, 2012 by Bill Catlin (0 Comments)
Filed under: Jobs & unemployment, Minnnesota Fortune 500 companies

There are three signs of a strengthening economy in Minnesota and nationally out today.

Minnesota employers added a robust 15,500 jobs between December and January.

In addition, annual revisions to past employment data show Minnesota added more jobs than originally believed after the recession. Through last December, Minnesota has regained almost 14,000 more jobs than originally calculated since employment hit bottom in September of 2009.

The state's jobless rate fell one tenth of a percent to 5.6 percent in January.

Meanwhile, Target reported a 7 percent increase in February sales at stores open at least a year. That was stronger than the company expected. Sales at stores open a year are an important retail measure, since the number excludes the effects of recently opened or closed stores.

Also a gauge of business conditions indicates the state's factories are likely to continue hiring at a healthy pace.

On the other hand, the Federal Reserve Bank of Minneapolis today revised downward its projection for job growth in Minnesota. Nonfarm employment is expected to grow 1.3 percent this year, down from last December's forecast of nearly 3 percent. But the Minneapolis Fed also predicts the state's jobless rate will be much lower by year's end, down to 4.9 percent from the original forecast of 6.5 percent.

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Target Sales Fall Short In Key Quarter

Posted at 3:52 PM on February 23, 2012 by Marty Moylan (0 Comments)
Filed under: Minnnesota Fortune 500 companies

Sales and profits at Target were disappointing for the three-month period that included the important holiday shopping season.

Target's net income for the quarter ending Jan. 29 fell by about five percent to $981 million. Total revenue rose 3 percent to about $21 billion.

The retailer says it choose not to be as aggressive as some rivals, such as Walmart, were with price cuts. Target CEO Gregg Steinhafel says the company expected sales at stores open at least one year --a key industry benchmark-- would increase by about three percent. But they only rose by two percent.

"The shortfall was concentrated in the peak of the holiday season, as promotional activity throughout retail was exceptionally intense, and we choose to maintain an appropriate balance between driving sales and profitability," he said.

Target shoppers also made greater use of company-issued credit and debit cards that offer five percent discounts on Target purchases. That narrowed profit margins. The company expects the cards will generate about 12 percent of its sales this year.

Steinhafel said the retailer's performance was hurt by its website, which had speed, navigation and other problems.

"It hurt and the primary timeframe where it hurt the most was really in the November, first couple of weeks of December timeframe," he said. "As we have added fixes to the website, we have seen our business on the dot-com site continue to get better."

Target's website suffered high-profile crashes last September and October. It also had an outage in November. But the retailer says its site was outage-free throughout the holiday season - including Thanksgiving weekend and Cyber Monday.

Other retailers also didn't have a very merry holiday. Sales at Walmart stores open at least year, for instance, rose two percent. But price cuts that juiced up sales contributed to a 15 percent profit decline.

Sales at Kohl's stores open at least a year fell two percent, as shoppers resisted price hikes.

Investors were expecting worse financial results from Target, and the company's share price rose 2.9 percent to $54.50 on Thursday.

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The Price of Price Resistance for General Mills

Posted at 1:14 PM on February 17, 2012 by Marty Moylan (0 Comments)
Filed under: Minnesota Fortune 500 firms, Minnnesota Fortune 500 companies, Twin Cities metro

General Mills' earnings for its current fiscal year won't be as good as the company expected.

The maker of foods such as Progresso soup, Hamburger Helper and Yoplait yogurt, is reducing its full-year earnings forecast by about two percent.

Edward Jones analyst Jack Russo said consumers are resisting the attempts of General Mills and other food companies to pass long rising commodity costs. And that's hurting sales and profits.

"A lot of companies have raised prices on their products to offset higher commodity costs," he said. "And it appears that consumers are voting with their feet and have just said, 'Look, we can't afford some of these higher prices' and have cut back on purchases, perhaps looking at [grocery stores'] private label [offerings] a little bit. Or perhaps just cutting back period on what they're spending."

Bloomberg Research consumer products analyst Ken Shea said it's hard to fight consumers' frugality.

"Consumer spending is tight," he said. "And consumers are looking for bargains. So, it's just a tough environment for food manufacturers in general to generate sales and profitable growth."

The federal government said grocery store prices rose by nearly five percent last year and may rise by about three percent this year.

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Target lays groundwork for bigger Brooklyn Park campus

Posted at 4:42 PM on January 24, 2012 by Annie Baxter (0 Comments)
Filed under: Minnnesota Fortune 500 companies

Target is laying the regulatory groundwork for a potentially larger Brooklyn Park campus than what the city has already approved.

The retailer is now proposing about 1.7 million square feet of office space at its North Campus in Brooklyn Park. That's about 200,000 square feet more than Target's prior plan. The plan must undergo an environmental review.

The city's economic and redevelopment director, Jason Aarsvold, says the new proposal does not necessarily mean Target will add office space.

They still have to come in and submit plans for what they're actually going to build. So this is just laying out parameters for the amount of development that could occur on the site.

Aarsvold says it's not clear if Target's presence is already boosting economic activity in the area. But that's the hope for the future.

Target is moving about 3,900 workers from its downtown Minneapolis headquarters to its campus in Brooklyn Park over the next two years.

Here's what Target spokeswoman Molly Snyder said in an email:

Due to continued, steady growth, Target has outgrown the company's available downtown Minneapolis space. Therefore, as a part of our strategic, long-term growth planning, Target will begin to develop a corporate technology campus on our Brooklyn Park site.

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Minnesota's exports climb in third quarter of 2011

Posted at 4:58 PM on January 12, 2012 by Annie Baxter (0 Comments)
Filed under: Minnnesota Fortune 500 companies

Minnesota's exports posted a third-quarter record in 2011. Agricultural, mining, and manufacturing exports grew to $5.1 billion in the three-month period ending in September. That was an increase of 4 percent from the same period in 2010.

Exports to Mexico saw the biggest jump by percentage, climbing 47 percent to $356 million. That helped boost Minnesota's North American exports by 5 percent in the third quarter, despite a 2 percent drop in sales to Canada, the state's biggest export market.

Asia and North America were the state's strongest performing regions on dollar volume.

Sales in the European Union increased by 4 percent to $987 million. But results in that debt-hammered area were mixed. Exports to the United Kingdom, France and Italy grew, while those to Germany, the Netherlands, and Ireland fell.

Sales of Minnesota products to Central and South American were also down in the third quarter. They fell 9 percent.

Exports of vehicles and parts enjoyed the largest overall dollar gain, with particular strength in snowmobiles and parts for specialized vehicles and trucks. Check out Marty Moylan's story last month reporting on Polaris's expectations about a growing export market for its products.

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